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Itron (ITRI) Announces Proposed Offering of $400M Senior Notes

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Itron, Inc. (ITRI - Free Report) recently announced its intention to offer $400 million aggregate convertible senior notes due 2026. The interest rate and other terms of the notes are yet to be determined. The offering is subject to market and other conditions.

The notes will be offered to qualified institutional buyers only and in accordance with Rule 144A under the Securities Act of 1933, as amended. The company intends to give the initial purchasers an option to buy up to an additional $60 million aggregate principal amount of notes.

Cash Position

At the end of fourth-quarter 2020, Itron’s cash and cash equivalents totaled $206.9 million, down from $586.2 million as of Sep 30, 2020. Long-term debt at fourth quarter-end was $902.6 million compared with $1.31 billion at third quarter-end.

Itron generated $38.9 million of cash from operations in the fourth quarter compared with $45 million in the prior quarter.

Moreover, the company generated free cash flow of $29.03 million in the quarter under review compared with $38 million in the third quarter.

In our view, the stock offering is expected to boost financial flexibility and help Itron meet financial obligations in an efficient way. Moreover, the latest move provides it with ample scope to deploy capital for long-term growth opportunities and reward stockholders with higher returns.

Itron, Inc. Price and Consensus

Itron, Inc. Price and Consensus

Itron, Inc. price-consensus-chart | Itron, Inc. Quote

Share Price Performance

Itron has returned 36.9% in the past year, underperforming the industry’s 57.9% rally and S&P 500’s rise of 43.8%.

Bottom Line

Its expanding product offerings, end-market strength and robust performance in key markets are growth drivers. The company has been witnessing growing contract wins, which is a positive. Also, Itron’s supply chain optimization strategy is another growth catalyst.

The company remains optimistic about strategic investments and growing footprint in the connected devices space. Further, strengthening momentum across the Riva distributed intelligence platform is likely to continue aiding Itron’s performance.

However, sluggish Device Solutions and Networked Solutions segments remain concerns. Further, manufacturing inefficiencies, sluggish demand environment and operational constraints owing to the ongoing pandemic are woes.

Zacks Rank and Stocks to Consider

Itron currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader computer and technology sector include KLA Corporation (KLAC - Free Report) , TE Connectivity Ltd. (TEL - Free Report) and Mettler-Toledo International, Inc. (MTD - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rates for KLA, TE Connectivity and Mettler-Toledo are projected at 11.6%, 10.4%, and 13.8%, respectively.

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